It seems like most people live with debt these days. Deciding what to do about your debt can be stressful. If your debts are large enough, you may even be thinking about filing for bankruptcy so that you can start over again. Weighing the pros and cons of bankruptcy is important. Since there are downsides to filing for bankruptcy, it isn’t a decision you should make without some serious consideration. Talking with a bankruptcy lawyer from a firm like Pioletti Pioletti & Nichols can help you decide whether bankruptcy will benefit your situation. It’s important to know that filing for bankruptcy can affect you for years. When determining if bankruptcy is the best option for you, you will want to consider:
The Size of Your Debt
Filing for bankruptcy isn’t a good option if your debts are relatively small. Debt collectors can be intimidating and you may feel pressured by their demands for payment. However, you should know that there are other options for dealing with small debts. On the other hand, if your debts are large, filing for bankruptcy might be your best path forward.
The Type Of Debt
There are many types of debt, and bankruptcy doesn’t absolve all of them. If you have debt from student loans, alimony, child support, or income taxes, your debt may not be cleared by filing for bankruptcy. Speaking with an experienced bankruptcy protection lawyer will help you understand whether your debts qualify for bankruptcy.
The Amount of Time You Will be in Debt
It’s scary when your financial situation suddenly changes. You may find yourself unable to pay your bills and make credit card payments. Your first inclination might be to file for bankruptcy to stop the calls from debt collectors, but it might not be the best decision. If you have a history of paying your bills on time and you only experienced this change recently, you may want to wait to see if you reach financial stability again. However, if you have been stuck in a cycle of debt for a long time, filing for bankruptcy might allow you to get a fresh start.
Your Source of Income
If your income sources are social security, welfare and/or unemployment, debt collectors cannot sue you for your income. Nevertheless, if you own property, cars, or a house, collectors may be able to seize those assets.
Alternatives to Bankruptcy
In most cases, the goal of lenders is to be paid, which can give you some leverage. If you feel you will eventually be able to pay them back, it may be worth speaking with the lenders to see if you can work out a payment plan. Sometimes they are open to adjusting the payment schedule or amount. They may even be willing to temporarily lower your interest rate so you don’t default on your debt.